Money dealers count Pakistani rupees and US dollars at a currency exchange in Islamabad. — AFP
With the sharp increase in Pakistan rupee’s value against all time favourite US greenback, expatriates are hesitant to send money back home unless necessary, which has plunged the remittances by up to 20 per cent in the last ten days.
To everybody’s surprise, the rupee continued its gains against US dollar on Wednesday when it hit Rs98.92 to a US dollar from Rs108.50 and Rs26.95 to a UAE dirham from Rs29. The new exchange parity was unbelievable for many Pakistani expatriates, who had been gaining on falling rupee, due to poor economy, bad law and order and flight of capital abroad.
In the background interviews, the financial industry sources told Khaleej Times that the rupee is likely to maintain its parity at current levels, as it has touched its “base line.” They asked the government to intervene in order to protect the exporters who are facing heavy losses. But, little is shared by the government, in Islamabad, about why the troubled currency, which suffered the most in the instability-hit country, soared in the last two weeks.
It all started after Saudi Arabia’s Crown Prince Salman bin Abdulaziz’s landmark visit to Islamabad on February 16. He promised a life-line of $750 million in the shape of an oil facility on deferred payments, which will give immediate relief to the government facing slow economic growth and subsequently a dip in revenues generation. Apart from oil, next week Pakistan is floating a $500 million worth Euro Bond and a $550 million installment is due from IMF in April to further bolster the forex reserves to $10 billion from $9 billion of today.
Another positive development, which has added on the bullish sentiments prevailing in the markets, is the fact that the foreign direct investment has climbed to $523 million in the first seven months of the fiscal year (June-July). The Chinese promise of $30 billion investments in infrastructure and energy sectors disturbed the speculators on the kerb market, who had already been given a strong massage by the government to behave, a source in Karachi said.
The ban on gold import in January for a month was a measure which went according to the plans. The decline of all time strong US dollar started two weeks earlier, after reaching a peak of Rs108.5, forcing importers, exporters and other individuals to keep their liquidity in hard currency, as a hedge against devaluation. Officials at the UAE-based exchange companies termed the decline in remittances as normal.
“People are holding back their money, as exchange rate is highly volatile... And they don’t want to lose.” They hoped that with the return of stability in the currency bazaar, the remittances will pick again.
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